Right now I am using:
-Dell speakers with sub-woofer
-On-board sound on a good-quality board
-Sony MDR-XD100 headphones

I want to achieve the better audio quality for music. What would be the best thing to upgrade first for a price range of around 100$? And I want to either upgrade my speakers or headphones, not both, depending on which will give me the best quality.

I would suggest a proper pair of quality stereo headphones and then buy a separate cheap headset, remove the microphone from it and mod it onto the headphones using some double-sided velcro. Your money will go much further this way.

The AD700's aren't bad for most music genres, but if you listen to rap or hip hop you'll lose out on "oomph" (bass).

The best all-around headphones I've ever used are Beyer DT 880 and DT 990. A lot of people like the 880's more, but I dunno...music just sounds more fun on my DT 990. Try to find a store where you can test run some headphones with your mp3 player!

The AD700's aren't bad for most music genres, but if you listen to rap or hip hop you'll lose out on "oomph" (bass).

The best all-around headphones I've ever used are Beyer DT 880 and DT 990. A lot of people like the 880's more, but I dunno...music just sounds more fun on my DT 990. Try to find a store where you can test run some headphones with your mp3 player!

For a little over 100$, grab a pair of ATH M50 or Fischer audio FA-011. Great headphones

The AD700's aren't bad for most music genres, but if you listen to rap or hip hop you'll lose out on "oomph" (bass).

The best all-around headphones I've ever used are Beyer DT 880 and DT 990. A lot of people like the 880's more, but I dunno...music just sounds more fun on my DT 990. Try to find a store where you can test run some headphones with your mp3 player!

Just keep in mind the 880's are semi-open and the 990's are fully open. Pick up the 770s for a closed set. Pay attention to which ohm rating you get with these. It ranges from 32obm - 600ohm. If you're running it from your comps onboard or a midrange soundcard, I'd get the 80 ohm ones.

The ATH M50's aren't bad either. I picked up my DT770s for comfort first and good quality audio second.